Wyoming’s Audacious Plan: Make $205 Million in Federal Health Funding Last ‘Forever’

Wyoming officials believe they’ve found a way to stretch five years of federal rural health grants into a perpetual funding stream—by investing most of the money and living off the returns. The proposal, now advancing in the Legislature, would create a first-of-its-kind “perpetuity fund” using a massive windfall from last summer’s One Big Beautiful Bill Act.

The state will receive $205 million in the first year alone from the new $50 billion Rural Health Transformation Program, created by congressional Republicans as a sweetener to offset deep Medicaid cuts in the same law. Wyoming asked for $200 million. Federal officials gave it $5 million more.

Rather than spend the money quickly, state Health Department Director Stefan Johansson wants to park 80% of this year’s award—$164 million—in an investment fund managed by the state treasurer. The fund would be invested in equities, including stocks. Each year, the state would spend 4% of the fund’s value, matching its expected return, on rural health programs. The principal would remain untouched, generating income in perpetuity.

“We would have this available to help fund us over a longer time period,” said Patrick Hardigan, dean of the University of Wyoming’s College of Health Sciences.

The plan faces one giant question mark: Will the federal Centers for Medicare & Medicaid Services allow it?

Federal rules require states to spend each year’s grant by the end of the following fiscal year, with leftover funds redistributed or returned. But Johansson argues that depositing the money into the perpetuity fund counts as spending it. He told lawmakers that CMS called in December with questions and that he believes the agency has formally approved the concept. A CMS spokesperson would not directly comment.

Kevin Bennett, director of the South Carolina Center for Rural and Primary Healthcare, called the idea “very clever” and “wild.” But he noted the big question is whether federal officials will approve.

Wyoming’s application states that “all program income from these investments will directly fund” rural health programs—not generate profit. The state estimates the fund could provide $28.5 million annually for:

Incentive payments to small hospitals, including one-time grants, medical debt relief, and ongoing fixed-cost support. Hospitals would have to reduce “unprofitable, duplicative or nonessential” services and participate in regional collaborations to qualify.

Payments to rural ambulance services to encourage coordination or consolidation, helping fund vehicles, equipment and regional dispatch.

Scholarships for nursing, behavioral health, and emergency medical students who agree to work in Wyoming for five years after graduation.

Medical school scholarships for doctors who commit to practicing in underserved counties, with priority for family medicine and obstetrics.

The bill creating the fund passed the House Appropriations Committee unanimously Feb. 12 and now heads to the full House. If approved, Wyoming would be the first state to attempt this strategy with federal health grants.

Johansson acknowledged a risk: future legislatures could spend the money in ways CMS disapproves, triggering a clawback. “I can’t predict the future,” he said. “But I think they have the authority to go look at the appropriate use of those funds through their audit parameters.”

Bennett summed up the trade-off: “Everything has trade-offs.” Wyoming would have less money for rural health care in the short term in exchange for an income stream that could last decades—if federal officials let it.